Dusseldorf Frank Koch, who has been the new CEO of the steelmaker Swiss Steel since the beginning of the year, is still surrounded by evidence of the past and the present in the executive office at the Düsseldorf location: Pictures of gas-powered walking beam and electric arc furnaces hang on the walls. A steel combustion engine is displayed on a pedestal near the window. It’s all supposed to be history soon – Koch took office in January to transform much of it.
Because like the entire industry, the Swiss steel group, which operated under the name Schmolz + Bickenbach just a year ago, must free its production of CO2 as quickly as possible. “We are currently one of the providers with the lowest CO2 footprint on the market,” said Koch in an interview with the Handelsblatt. According to the manager, the company’s emissions are already almost 80 percent below the global industry average.
Koch took over the leadership of Swiss Steel at a turbulent time. After the group, which never recovered from the 2007/2008 financial crisis, was in the red for years, family entrepreneur Martin Haefner pushed through a capital increase in 2021. The steelmaker took in more than 220 million euros.
In addition to Haefner’s Bigpoint Holding, which currently holds around 40 percent of the shares, the Russian oligarch Viktor Vekselberg is also a shareholder.
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The CEO of the Swiss Steel Group trims the steel manufacturer for CO2 reduction.
(Photo: Swiss Steel Group)
However, due to US sanctions following the annexation of Crimea, Vekselberg had already had to reduce its legal influence over Swiss Steel in recent years. Swiss Steel currently states that the shares directly attributable to Vekselberg are around eight percent.
However, this share is part of an almost 26 percent block of shares held by Liwet Holding. The holding, in turn, is controlled by people close to the Russian billionaire.
The fact that it is still difficult for Liwet to assert itself against Haefner was shown in the run-up to the capital increase: the fund had tried unsuccessfully to block the planned capital increase from the commercial register office at its headquarters in Lucerne. Haefner had pushed this through with his majority at the time. This now gives Koch the financial scope to fundamentally transform Swiss Steel.
Investing in decarbonization
Before taking up his position at the steel manufacturer, the 50-year-old worked, among other things, as CEO at Georgsmarienhütte and in various management positions at Thyssen-Krupp, including at Deutsche Edelstahlwerke, which now belongs to Swiss Steel. So the manager knows his way around the business, which is currently facing the biggest change in its history.
Because steel production is one of the largest CO2 producers: A classic blast furnace producer currently emits around two tons of CO2 per ton of steel produced.
There is another way: At Steeltec, the special steel subsidiary of Swiss Steel in Emmenbrücke, Switzerland, the emissions are just 63 kilograms. The big difference compared to competitors such as Thyssen-Krupp, Arcelor Mittal and Salzgitter is that they produce their steel using iron ore and coal in a blast furnace. Swiss Steel, on the other hand, obtains its steel exclusively from scrap that is melted down in the electric arc furnace.
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Even in comparison with other steelmakers that use the same electricity-based process, the CO2 balance of the Swiss is impressive. For example, Georgsmarienhütte states its emissions for the entire group at around 400 kilograms per tonne of crude steel. And it also produces its steel from scrap in electric furnaces. However, a large part of the emissions are generated during the production of the electricity that is required to operate the furnaces.
Swiss Steel, on the other hand, now relies entirely on electricity produced in a climate-neutral manner in its plants in Emmerich, Düsseldorf and the Canadian state of Toronto. In Switzerland, for example, this is hydroelectric power, which is generated in cooperation with the energy supplier Axpo.
At other locations in Germany and France, the company also temporarily converts its production to green electricity if a customer requests it.
In the meantime, the customers also include the competition: Swiss Steel and the materials trading division of Thyssen-Krupp in the aviation sector recently announced a partnership under which the Swiss will supply a subsidiary of the group with steel whose CO2 footprint is between 80 and 95 percent lower the industry average. “We see an increasing demand from our customers for CO2-reduced material,” says Patrick Marous, CEO of Thyssen-Krupp Aerospace.
Gas shortages could mean production stops
What remains of CO2 is mainly produced in further processing, for example in gas ovens or in logistics. “We are striving to further reduce our emissions,” explains Koch.
In Emmenbrücke, for example, the group recently invested 60 million euros in a new walking beam furnace, among other things. Another investment was made in the continuous heating process using inductive and gas-powered media, which uses around 13 percent less gas than before. In Krefeld, the company is researching hydrogen technologies to decarbonize the forming furnaces – a step that Koch cannot come soon enough in view of the energy crisis that may be imminent.
Because the further processing of steel is currently still a gas-intensive process. Like many other managers in the industry, Koch is currently worried that the Ukraine war could lead to shortages. The company has already made savings and is not dependent on gas for steel production itself. “However, if we are not supplied with sufficient supplies, we will have to shut down our production because certain further processing steps do not currently work without gas.”
An example of this is the continuous heating process using inductive and gas-powered media in Emmenbrücke: It is more economical, but would remain cold without gas.
Swiss Steel could probably continue to produce its crude steel with the electric furnace powered by green electricity. “However, we would only build up unnecessary stocks because we have no way of manufacturing other products from them,” explains the manager.
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